US Fed keeps interest rates unchanged at 5.5% for fifth consecutive meeting

March 20, 2024 (MLN): The US Federal Reserve decided to leave interest rates unchanged at 5.25%-5.5% for the fifth consecutive meeting.

The Federal Open Market Committee (FOMC) in a statement issued on Wednesday said that inflation has eased over the past year but remains elevated.

"The committee remains highly attentive to inflation risks," it said.

Policymakers have kept interest rates at a 23 year-high since July last year, maintaining a cautious approach before considering any rate adjustments.

The decision came in line with the market expectations, wherein the consensus was that of a rate pause.

The latest Fed dot plot shows a significant upward revision for the GDP growth forecast for 2024 and 2025.

Policymakers now expect GDP to grow by 2.1% in 2024, up from December's projections of 1.4%.

The Fed has also revised its median core PCE forecast for the end of 2024 to 2.6%, compared with 2.4% previously.

Federal Reserve officials maintained their outlook for three quarter-point rate cuts this year, while nine Fed officials expect just two or fewer interest rate cuts in 2024.

To note, at the start of this year, market was pricing in an 80% chance of a rate cut in March and a total of six cuts this year.

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